August 16, 2007

 

China's soy buyers looking to ship soy via containers

 

 

Higher freight rates for bulk carriers have prompted Chinese soy buyers to look at containers as a source of shipping their soy from the US and Latin America to China.

 

A galloping economy has meant that soy shipments to China would have to contend with ore and iron shipments for space on bulk carriers. The large influx of raw materials have pushed freight rates in bulk carriers to record highs.

 

Industry sources said freight costs in bulk carriers from the US Gulf have nearly doubled to more than US$90 a tonne in the past six months. 

 

Almost all of China's soy shipments are shipped by bulk carriers so far, but the rising costs have prompted some to shift to container shipments.

 

The migration to container shipments was first led by Taiwan's soy buyers, who saw empty containers returning from the US as a way to cut costs.

 

As China exports a vast amount of consumer goods to the US, many containers are loaded full at Chinese ports and return empty, meaning in theory, China could do the same.

 

While it would require thousands of containers for a typical soy shipment, buyers could achieve significant savings if they were to make the switch, experts said.

 

Chinatex Grains & Oils Import & Export Corporation for example, has taken the plunge. The company has imported 20,000 tonnes of soy through containers so far this year and is looking forward to more container shipments.

 

Another advantage of container shipments would be that suppliers could guarantee soy quality since shipments are parceled up. This would also allow differentiation between GM soy and those that are not.

 

Still, the vast volumes needed by China means containers are unlikely to replace bulk carriers anytime soon. Besides lengthy inspections, container shipments would also be difficult to process, sources said.